Americans are chasing wealth, but due diligence is essential to avoid losing ground to fees.
Harris Poll’s 2024 “Americans and Billionaires Survey” found that 6 in 10 Americans hope to achieve great wealth in their lifetime. Many see entrepreneurship (42%) and stock investing (39%) as the fastest paths to wealth. In addition, 57% of Americans believe that advances in artificial intelligence will help more people become billionaires in the future.
Among younger generations, the ambition is even stronger, with 7 in 10 aspiring to become billionaires. Once viewing professional sports as the clearest route to riches, they now see becoming an influencer or content creator as the new golden ticket.
But ambition does not guarantee execution. According to Charles Schwab’s 2025 Modern Wealth Survey, Americans believe they need $2.3 million to feel wealthy. Yet the Federal Reserve’s October 2023 Survey of Consumer Finances showed that the median family net worth for people ages 55 to 64 is just $364,500.
Schwab also found that 67% of Americans feel that successful investing now requires more than traditional stocks and bonds. Yet many still rely on luck or unconventional methods rather than structured advice. A 2023 poll by Empower found that 71% of Americans have bought a lottery ticket and 24% of millennials have consulted a fortune teller. A 2024 YouGov study found that only 27% of Americans use a financial advisor. Many want to be wealthy but are not following the proven habits necessary to build lasting wealth.
Perceived costs of consulting a financial advisor can have a role in the decision-making process. Here’s what you need to know about financial advisor fees and costs:
Trust and the Role of Advisors
More people are seeking professional guidance, yet trust remains a barrier. A McKinsey study released in February found that clients are increasingly willing to pay extra for personalized human advice over digital options. Firms are expanding services to meet this demand, but nearly 70% of Americans still say that trust is their biggest hurdle when choosing an advisor.
As a result, many continue to manage their finances on their own or turn to digital platforms. We are getting smarter about money, though not always through traditional channels. Fintech tools mirror the confidence and ease that younger generations feel with AI.
At the same time, the cost of professional advice remains a key concern. About half of Americans worry about fees, and their concerns are well founded. High fees quietly erode long-term returns. Even well-chosen investments can underperform when costs compound over decades.
Efforts by Congress, the Securities and Exchange Commission and the Department of Labor to improve fee transparency and fiduciary standards have stalled since the Supreme Court’s 2024 Chevron decision. A 2025 poll by the National Endowment for Financial Education found that 83% of adults believe high school students should be required to take a personal finance course, but state funding lags. For now, investors shoulder the burden to do their own due diligence.
6 Critical Topics to Start the Conversation
Talking about how an advisor is paid can feel awkward. Yet the best advisors welcome the discussion on fees because it allows them to show transparency and professionalism. Understanding these six areas can help you decide whether an advisor offers enough value to justify their cost:
Human or Robo Advisors
Human advisors provide personalized service and accountability, but robo advisors have matured and can handle many routine planning needs. For younger or lower-asset investors, robo options are often the most affordable entry point.
For more complex needs such as business sales, tax strategy or generational wealth transfer, robo advisors may fall short, and their advanced services may cost nearly as much as human advisors. Many firms now blend human advisors with AI tools to increase efficiency and allow humans to focus on more strategic guidance.
Compensation Structures
There is no single perfect way to pay for advice. Each model has strengths and drawbacks:
- Fee-only: Registered investment advisors charge a percentage of assets under management. The AUM model works well for clients still accumulating assets and is the most prevalent fee structure. The national average is 1.02%, but the percentage often decreases for larger portfolios. Since portfolio values change, billed fees vary with market movement. Smaller accounts are harder to manage profitably, so advisors often set minimums that can exclude new investors. Robo advisors help fill this gap, costing roughly 0.2% to 0.35% for standardized portfolios.
- Performance-based: The advisor earns an additional fee if results exceed a preset benchmark.
- Commissions: Some advisors earn compensation from product providers for selling mutual funds, insurance or annuities. Costs are often built into the product as expenses, loads or surrender charges. Clients do not receive a separate bill but pay indirectly. Commissions are typically higher than annual AUM fees but last for a shorter duration. Wrapped fees are another form of commission commonly used in employer-sponsored plans.
- Hybrid: An advisor may combine different pay models across services. They must clearly explain which standard of care applies to each recommendation.
- Flat, hourly or project fees: These options may suit younger investors, retirees or anyone who prefers predictable costs. Project fees are ideal for short-term goals such as a wedding, home purchase or business exit plan.
Advisor Fees vs. Product Fees
Advisory fees pay for guidance, while product fees cover investment costs. A client might pay a 1% advisor fee plus a 1% product fee, for a total cost of 2%. A client is not paying twice for the same benefit.
Billing and Invoicing
Advisory fees continue for the duration of the relationship and may be billed monthly, quarterly or annually. Many advisors still calculate invoices manually, increasing the risk of errors. Product fees are automatically deducted from accounts, so review statements for accuracy. Regulators expect firms to match invoices to their disclosed fee structures. If you suspect an error, request an account reconciliation. Any hesitation from your advisor should be a red flag.
Deductibility
In July, the One Big Beautiful Bill Act (OBBBA) permanently repealed the deductibility of investment advisory fees.
Transparency
Good advisors will openly discuss compensation, as the right choice keeps them motivated to stay engaged with your financial goals. AUM advisors may emphasize that their success aligns with your portfolio’s growth. Retirees drawing down assets or making large lifestyle purchases may find that flat, hourly or project-based fees make sense.
3 Questions All Advisors Should Be Able to Answer
Here are three questions that every advisor should be able to answer clearly and confidently:
- “What is my total cost for the year, and what will I receive in return?”
- “If you only do better when my account grows, what is your plan if the market drops?”
- “If you earn a commission, how do you ensure your recommendation serves my long-term interests?”
The smartest investors are not always the ones with the biggest portfolios. They are the ones who understand what they are paying for, ask direct questions and align their strategy with their goals. Whether you work with a human advisor or digital platform, understanding fees can make all the difference between your ambition and outcome.
